Many online retailers are reducing free shipping in order to preserve their profit margins as a result of growing costs from tariffs and shipping surcharges. While some online retailers have raised the minimum amount needed to be eligible, others have completely stopped offering free shipping. These adjustments are a component of larger initiatives to subtly transfer some of the cost to consumers without raising product prices.
Retailers scaling back on free shipping to offset tariff impact
The company Modern Picnic, which sells stylish lunchboxes, recently increased the amount that qualifies for free shipping from $150 to $300. There is now a $15 shipping charge for orders under that amount. According to founder Ali Kaminetsky, that charge helps defray additional costs brought on by tariffs and higher delivery rates, even though it doesn’t completely cover shipping costs. “It was a tough decision,” Kaminetsky said. “We just had to offset these increases somewhere, and shipping seemed to be one of the more logical places.”
The action is part of a growing trend of retailers negotiating the effects of U.S. tariffs, especially those targeting Chinese imports. In order to offset the duties, which are 10% on the majority of imports and up to 30% from China, big-box retailers like Walmart are raising prices, but smaller brands are changing their logistics. Additionally, some businesses have asked suppliers to share the load or moved their manufacturing outside of China.
Online brands are searching for subtle ways to control costs, according to Anisa Kumar, CEO of retail tech company Narvar. Retailers “don’t know how the backlash is going to be if you just show tariffs right there,” Kumar explains. Alternatively, many businesses are “trying to tighten up on lines like transportation and returns and things that are not as front-facing to consumers as that first shopping price.”
Orthopedic shoe retailer KURU Footwear has also modified its shipping strategy. Currently, customers must sign up for a loyalty program in order to receive free shipping; otherwise, they must pay $8.99. “The charge doesn’t cover the company’s full delivery cost, which is more than $10 a package,” said Chief Financial Officer Matt Barnes. “Still, charging the fee is helping KURU absorb the new levies.”
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